If you’re running a subscription business you’ll be keeping a close on this simple metric. Crucially, a lost customer is not a customer that has ‘cancelled’, for example they’ve called / emailed in to cancel their contract, or have clicked a ‘Cancel’ button in your platform. Lost customers are a count of the number of customers in the period that have churned.
A customer has ‘churned’ when the end of the contract period occurs. So if they cancel part way through a monthly billing contract, then they are not considered as a Lost customer until their next billing date.
How is Lost customers calculated?
The number of customers who have churned in a given period are counted.
The formula for calculating Lost customers is:
Lost customers = Count of Customers who were billed last month, but not this month.
Last month, 80 customers ‘cancelled’ their monthly contract with the business.
1 year ago, 3 customers ‘cancelled’ their annual contract with the business.
This month, they would all be counting toward the Lost customer count.
Ie. 80 monthly customers from last month + 3 annual customer from last year = 83 customers lost this month.
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